City seeks to refinance bonds to save money

Robert Koch

Published
7:00 pm EST, Friday, January 18, 2008

NORWALK -- The city is positioning itself to refinance $60 million in general obligation bonds for a possible savings of more than $300,000.

"Interest rates have come down, so it appears that there's some refinancing opportunities that could generate some interest savings -- about $311,000 is the projection right now," said Thomas S. Hamilton, the city's director of finance. "We first have to have approval and then it will take some time to get to the market."

"We're watching the market and we'll listen to our advisors on that too," Hamilton said.

Pending approval, the city will move forward with the refinancing this spring "or earlier this winter," Hamilton said.

The city routinely monitors interest rates in search of refinancing opportunities that can save money. When such opportunities arise, Hamilton and City Comptroller Frederic J. Gilden bring them to the attention of the Common Council's Finance & Claims Committee.

The committee last Thursday recommended that the full council authorize Hamilton's department to move forward with the $60-million bond refinancing.

The city issues general obligation bonds to pay for school renovations and other capital projects.

Norwalk's net indebtedness is projected to peak during fiscal year 2008-09 at $201.2 million and then begin receding. Likewise, debt service payment is projected to peak at 9.2 percent of total expenditures in 2008-09, according to the finance department.

In 2005, the finance department refinanced $22.8 million in outstanding debt for a projected savings of $679,493 over the life of the bonds.

"The threshold we look for is a present value savings of 2 percent, and this generated a 2.3 percent savings," Hamilton said at the time.